Who Can Own a Dental Practice in Texas?
- Mar 1, 2021
- Erick Cutler
It would seem logical that a dental practice would be owned by….well, a dentist, right? That line of thinking – in some states – has become a thing of the past. It’s fairly straightforward when dentists operate their practices as sole proprietors. But what happens when they change their entity status? Can non-dentists enter the picture? And what does Texas have to say about non-dentist involvement?
Is the “Corporate Practice of Dentistry Doctrine” in Decline?
The majority of states still follow the “corporate practice of dentistry doctrine,” which states that only dentists can own dental practices. However, more recently, changes in some state laws have greatly limited, and in some cases eliminated, the application of the corporate practice of medicine doctrine to medical and dental practices.
Some states, including Wisconsin, allow business corporations and limited liability companies, not just service corporations, to own dental practices. That meant anyone, not just dentists, can be the owners of these entities. The Wisconsin State Dentistry Examining Board issued a written policy to clarify that nothing in Wisconsin law prohibits non-dentists from owning dental practices.
State Laws Vary
Changes regarding dental practice ownership came about at the request of physicians and dentists who wanted to switch to a corporate status to benefit from tax and liability advantages.
For example, In Pennsylvania, there is nothing in the dental law or regulations that would prohibit ownership of a dental practice by non-dentists as long as non-dentists are not directly involved in the practice of dentistry. Compare that with Michigan, where state law prohibits ownership of a dental practice by anyone other than a licensed dentist. In fact, all shareholders of a professional corporation and all members of a professional limited liability company organized in Michigan for the purpose of providing dentistry services must be licensed or legally authorized to practice dentistry.
Drawing the Line in Texas
Think in terms of clinical versus business. The dentist controls all things clinical while the non-dentist is responsible for managing the back end of the business but can’t touch any aspect of the clinical practice. The non-dentist owner can buy land, lease or purchase the building and – in some states – even buy dental equipment and supplies. Additionally, they can provide staffing of non-licensed employees, engage in marketing and provide billing services. It’s important to note that they can’t fire dental associates, technicians, and assistants.
Some states, including California and Texas, think it is essential that dentists have sole control over decisions, including:
- The number of patients the dentist sees
- How many hours a day the dentist is required to work
- The hiring and firing of dental associates, technicians, and assistants
- The parameters for insurance contracts
- Coding and billing procedures
- Selecting dental equipment and supplies
Texas law is clear on who can and can’t own a dental practice in the state. In fact, court rulings have found that the Texas legislature preserves the “vitally important doctor-patient relationship” because the state does not want improper control or influence over a dentist’s practice with regard to prescriptions, equipment, treatment, etc.
However, according to the Texas Dental Practice Act, “…agreements covering non-clinical matters such as leases of space or equipment, the provision of advertising, collection services, and others are permitted.”
It will be interesting to see who will be able to own a dental practice in which states going forward. In the meantime, if you have any questions or need clarifications, it will be worth your while to find out before you risk being in violation of state law.
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Erick Cutler is a Partner in the Private Client Services Group, with nearly 25 years of public accounting experience including health care and the real estate industry.
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